An exclusive story from Reuters delves into a snafu in Louisiana involving AIDS patients and third party payments to insurers that defray the costs of AIDS drugs.
Essentially, the problem lies with the Centers for Medicare and Medicaid and an anti-Obamacare fraud guidance ruling from last fall that warned insurers about third party payments being a likely way for fraudsters to operate. Unfortunately, they didn’t consider the impact on AIDS patients, who receive money to pay for their expensive drugs from third parties under the 1990 Ryan White Act. Blue Cross and Blue Shield in Louisiana informed those patients that their coverage will be terminated on March 1 of this year.
“In no event will coverage be provided to any subscribers, as of March 1, 2014, unless the premiums are paid by the subscriber (or a relative) unless otherwise required by law,” Blue Cross Blue Shield of Louisiana spokesman John Maginnis told Reuters.
The dispute goes back to a series of statements from Centers for Medicare and Medicaid Services (CMS), the lead Obamacare agency.
In September, CMS informed insurers that Ryan White funds “may be used to cover the cost of private health insurance premiums, deductibles, and co-payments” for Obamacare plans.
In November, however, it warned “hospitals, other healthcare providers, and other commercial entities” that it has “significant concerns” about their supporting premium payments and helping Obamacare consumers pay deductibles and other costs, citing the risk of fraud.
The insurers told healthcare advocates that the November guidance requires them to reject payments from the Ryan White program in order to combat fraud, said Robert Greenwald, managing director of the Legal Services Center of Harvard Law School, a position Louisiana Blue still maintains.
“As an anti-fraud measure, Blue Cross and Blue Shield of Louisiana has implemented a policy, across our individual health insurance market, of not accepting premium payments from any third parties who are not related” to the subscriber, Maginnis said.
On Friday, CMS spokeswoman Tasha Bradley told Reuters that, to the contrary, Ryan White grantees “may use funds to pay for premiums on behalf of eligible enrollees in Marketplace plans, when it is cost-effective for the Ryan White program,” meaning that having people with HIV/AIDS enroll in insurance under Obamacare could save the government money.
“The third-party payer guidance CMS released (in November) does not apply to” Ryan White programs.
Maginnis did not respond to further requests, sent after business hours, for comment on CMS’s Friday statement.
Hundreds of indigent HIV/AIDS patients are dependent on Ryan White payments for Obamacare because they fall into a gap. They are not eligible for Medicaid, the joint federal-state health insurance program for the poor, because Louisiana did not expand the low-income program, and Obamacare federal subsidies don’t kick in until people are at 100 percent of the federal poverty level.
Before Obamacare, the 1990 Ryan White Act offered people with HIV/AIDS federal financial help in paying for AIDS drugs and health insurance premiums, especially in state-run, high-risk pools.
Despite the CMS statement that Ryan White funding will be accepted. it is apparently up to the provider whether they will or not. The article speculates that adverse selection is really at the bottom of BCBS’s reluctance to accept third party payments from patients who are very expensive to treat. It’s unknown who has been signing up for Obamacare in Louisiana, but its a pretty good bet that, like the rest of the country, there aren’t too many young, healthy people buying Obamacare policies. BCBS might be protecting itself from massive losses in this way.
The CMS guidance on third party fraid is just one more example of Obamacare’s unintended consequences.